Congregational Financial Comfort Level

churchbuildingIn this tight economy, it has become increasingly difficult for congregations to finance needed building improvements. Are you considering external financing from a local lender or from the UUA to help finance a building project? Because financing can be fraught with peril, I offer the following guidance.

Each congregation has its level of financial comfort. Some are comfortable with a relatively high amount of debt, while others are comfortable only if they are debt-free.

Most lenders, including the Unitarian Universalist Association, consider that some level of debt is healthy and can help a congregation to fulfill its mission. Here are three guidelines for determining an appropriate amount of debt:

  • Be sure that annual debt service does not exceed 25 percent of the congregation’s annual operating budget. 25percentThe Unitarian Universalist Association does not even consider a loan or loan guarantee request if the annual debt service exceeds this level. The concern is not whether the congregation can service its debt; the concern is that the congregation may focus too much attention on making loan payments rather than on fulfilling its mission.
  • Keep the total project cost within two to three times the annual budget total.
  • Keep the total project cost to a maximum of 50 percent of the total property appraisal (when the project has been completed).


Program Budgeting: Say “YES” to pie charts and “NO” to line items

Are you frustrated that your fixed costs and employee salary packages represent the bulk of your line item budget? Can you imagine your annual budget development process devoid of drama, line-by-line contentious arguments, and anxiety about which line items to decrease or eliminate? Because this scenario is so prevalent and fraught with negativity, I want to share this information with you.

When congregants are asked to make a financial commitment to the annual operating budget, most want to know where their money is going and how it will make a difference. At the same time, they don’t want to be overwhelmed with too much financial detail. The best approach is to develop a program budget and to communicate it through pie charts.

Program budgeting is a method designed to clarify and simplify the operating budget. A typical congregational program budget divides annual income into four or five sources and annual expenses into four or five broad categories. Pie charts show the proportion of income from each source and the proportion of expenses in each category.

A program budget does not replace a line-item budget. It serves as an introduction to the proposed budget. The program budget proposal is shared with congregants when they are asked to make their financial commitment. The pie charts make it easy to see where financial resources come from and how the congregation chooses to allocate them, including the relative significance of various programs and ministries. These priorities may be altered if the congregation chooses. After the annual budget drive, the pie charts are converted into a line-item budget and presented to the congregation for adoption.

Best Stewardship Practices for Tough Economic Times

In response to the current economic situation and several requests, with the help of my consultants and support staff, I have compiled best practices that relate to fundraising during difficult economic times.  I especially encourage congregations to remain positive in these difficult times.

Giving During Tough Economic Times

Best Practices

Compiled by UUA Stewardship Consultants

  1. Stay positive. Don’t feed the anxiety.
  2. Act and lead with confidence.
  3. Assume that all will be well . . . Don’t assume the worst.
  4. See the recession as an opportunity to revisit your congregational vision and mission.
  5. Ask “How important is the congregation to you?”
  6. Believe that caring for people always trumps brick and mortar needs.
  7. Use pie charts to depict the distribution of the previous year’s spending.
  8. Use pie charts to indicate the anticipated distribution of financial commitments when the goal is met.
  9. Develop a line-item annual operating budget after completion of stewardship conversations.
  10. Do not presume other’s financial situation. Ask everyone for an annual financial commitment.
  11. Be pastoral. Focus on “how are you doing” personal conversations.
  12. In addition to monetary goals, create a goal for the number of congregants participating in the annual budget drive. Define success more broadly.
  13. Sponsor a “turn down the heat” day each week and host a pot luck meal at church.
  14. Sponsor a job-seeking club / a referral network / a resume writing workshop.
  15. Promote open conversations about “living well in tough times.”
  16. Market a “business is booming” slogan to spread the good news of the congregation.
  17. Focus on three key words; help, hope, and home.
  18. Emphasize that the faith community is a haven during tough times.